Wednesday, October 8, 2008

A propos ...

A propos the previous post, Esther Duflo argues that too many of the best and brightest have gone into finance, that the result has not been socially beneficial, and that the reallocation of human capital in the wake of the collapse will on balance prove positive.

Arindrajit Dube goes farther: he contends that the high remuneration of financiers accounts for much of the increased return to education that has been observed over the past two decades. This would be a significant finding if true, but the proof is not yet available.

1 comment:

Leo said...

Esther Duflo hits the nail right on the head. This is a huge market failure: incapacity to correctly allocate our most precious resource, i.e. our collective intelligence.

I have grown increasingly alarmed as I watched some of the best mathematical young minds in France forego scientific or engineering careers in favor of trading complex derivatives in bank dealing rooms and I went completely bezerk when a friend of my son's, a very bright seismic engineer with 12 years experience who was called as a consultant for complex structures in Japan told me he was quitting to, you guessed right, write Credit Default Swaps in a large Australian bank. I do hope it will change for the greater good of our societies, but it will take a while until our brightest realize a career in industry is exciting.